Chapter 2 - Federal Legislation Flashcards
The Canada Revenue Agency (CRA) is a federal government agency that manages the following business lines for the federal government _______________
Tax Services and Benefit Programs
From this mission comes the CRA’s mandate to:
- collect revenues and administer tax laws for the federal government and most provinces and territories
- deliver various social and economic benefit incentive programs to Canadians
The CRA tracks the success of the first part of its mandate by measuring compliance in the following areas:
- Filling
- Registration
- Remittance
- Reporting
The CRA’s program responsibilities that are specifically related to payroll include the administration of:
- The Canada Pension Plan (CPP) (shared responsibility with Employment and Social Development Canada and Service Canada)
- Employment Insurance (EI) (shared responsibility with Employment and Social Development Canada and Service Canada)
- Income Tax
The CRA’s goal is to have over 90% of individual and corporate tax filers pay their taxes on time
Remittance
The CRA’s goal is to have over 90% of individual and corporate income tax and registered business goods and services tax/harmonized sales tax (GST/HST) returns filed on time.
Filling
The CRA measures its success in this area by ensuring that the majority of all known businesses are registered for various programs, including corporate income tax, GST/HST, payroll deductions, and import/export accounts.
Registration
The CRA measures reporting compliance through the information it receives on tax documents, such as the T4 and T4A information slips
Reporting
Are the first deductions to be withheld from an employee’s gross pay
Statutory deductions
What are the statutory deductions?
CPP contributions, EI premiums and income tax deductions
Under the Canada Pension Plan Act and the Employment Insurance Act, the CRA is responsible for determining:
- whether or not an individual’s employment is pensionable under the Canada Pension Plan Act or insurable under the Employment Insurance Act
- the establishment of annual maximum pensionable earnings
- the types of earnings that are considered pensionable or insurable
- how many hours an insured person has in insurable employment
- the recovery of any debts owed as a result of an overpayment of Canada Pension Plan, Employment Insurance, or Old Age Security benefits
social insurance program legislated under the federal Canada Pension Plan Act, designed to provide protection in the form of benefits to contributors and their families against loss of income due to retirement.
The Canada Pension Plan
In addition to retirement pension benefits, the plan provides supplementary benefits in the form of:
- surviving spouse pensions
- disability benefits
- benefits for orphans and children of disabled contributors
- death benefits payable upon the death of a contributor
TRUE OR FALSE: The employer matches the employee’s CPP contributions dollar for dollar
TRUE
TRUE OR FALSE: Although there is no legislated priority amongst statutory deductions, it is common practice that CPP contributions are the first statutory deductions withheld from an employee’s gross pay.
TRUE
The CRA’s responsibility for the Employment Insurance program are ________________
collection of employee and employer premiums and makes decisions about which types of remuneration are considered insurable and, therefore, subject to EI premiums
The employer’s portion is ___ times the employee’s portion unless the employer qualifies for a lower rate under the EI premium reduction program
1.4
TRUE OR FALSE: All employers are required by law to deduct EI premiums from the insurable earnings paid to their employees and remit these deductions, along with the employer’s portion, to the CRA.
TRUE
are the second statutory deduction to be withheld from an employee’s pay
EI premiums
TRUE OR FALSE: Employers are also required to track the employee’s insurable earnings and insurable hours by pay period for reporting purposes, such as completing the Record of Employment for a terminated or inactive employee.
TRUE
TRUE OR FALSE: All Canadian provinces/territories, except Québec, have entered into tax collection agreements with the federal government.
TRUE
An employer who remits withholdings or deductions late is subject to the following penalties:
- 3% will be applied to remittances that are 1 to 3 days late
- 5% for remittances that are 4 or 5 days late
- 7% for remittances that are 6 or 7 days late
- 10% for remittances that are 8 or more days late
TRUE OR FALSE: Québec collects its own provincial income tax. There are two separate income tax deductions withheld from Québec employees — one for federal income tax and the other for Québec provincial income tax.
TRUE
TRUE OR FALSE: As the federal government collects both the federal and the provincial/territorial portions of tax from all employees working in a province/territory other than Québec, the two tax withholdings, federal and provincial/territorial, are combined into one deduction amount.
TRUE
TRUE OR FALSE: Québec employees will see ‘Federal Income Tax’ and ‘Québec Income Tax’ listed separately on their pay statements. RQ is discussed extensively in a later chapter.
TRUE
TRUE OR FALSE: As a payroll professional, you need to have a clear understanding of how and when to make the required deductions and remittances to avoid these penalties and interest charges.
TRUE
